Certificate of Substantial Completion: Everything You Need to Know
A certificate of substantial completion is a vital document regarding performance. 3 min read
2. Costs Involved
3. Binding Certificate
Certificate of Substantial Completion
A certificate of substantial completion is a vital document regarding performance. Substantial completion is like a general contract pertaining to substantial performance, but it is more relative to the construction industry. Such a certificate could be used by contractors to guarantee that work has been finished for a certain project and within the parameters of the contract. Moreover, the certificate recognizes any minor items remaining. An engineer, owner, or architect can also verify that a project is finished, and the general contractor would approve payment on the day of final payment.
A certificate of occupancy (CO) is a good reference point that determines if a facility or building can be utilized or occupied for its intended purpose
- Note: Local municipalities tend to mandate a CO to get a substantial completion.
The substantial completion date is especially important because it assesses the date that contractors are no longer liable for delayed completion of incomplete work. After substantial completion, owners become responsible for the property again. This could include:
- Any other asset contained in an agreement
Contractors may still violate the contract, but breaches that are after substantial completion will constitute minor breaches. Further, there are reasons why the aim of substantial completion can, and usually is, a highly debated topic within the realm of litigation. Moreover, it can be extremely vital to place a definition on substantial completion that’s appropriate for each job.
The review cost when reviewing a document may save thousands in the long-term by avoiding costly court cases. You should use a certificate of substantial completion in the following cases:
- You are an architect who wishes to certify that a contractor completed a construction project so they can receive payment.
- You are a contractor who works on a project and wants a contractor certificate of completion to assure other parties that the work is completed.
Also, parties could produce a substantial completion within a contract and layout strict definitions of its terms. Determining substantial completion is usually done by third parties that are involved in the project. The contractor and owner may agree that third parties, such as engineers or architects, will evaluate contractor work, including the decision when to produce a certificate of substantial completion.
In many cases, the contractor and owner, including engineers, architects, or any other party, would sign the certificate, creating the date of the project completion.
When a third party has produced a certificate of substantial completion, one of the key milestones have been reached according to the contract terms. A party could challenge, for any reason, the substantial completion, but the party that makes the dispute could face a challenging road. The agreement calls for third parties to make a decision on performance like substantial completion, and the certificate is legally binding.
Except for mistakes or fraud, many states determined that such certificates from a third party are concrete. The certificate can carry heavy weight, and the parties need to keep in mind that its importance is good as stated in a contract. Fraud and mistakes do not have to be proved in instances where a construction contract does not determine that a third-party determination of the certificate should be conclusive and final.
Many construction agreements offer third parties vital influence in the overseeing of project progress on an owner’s behalf. The third party may also have authority to withhold the certificate until a contractor finishes key items and other uncompleted work.
- Note: The weight behind the completion certificate is only as good as the authority within the contract.
However, the contractor can instill safeguards by the insistence on language specifying the consequences and weight of certification. Further, owners can achieve through the reservation when necessary and minimize the effect of the certificate if any issue arises. With that, the contractor and owner must ensure that they understand and know the ramifications of a completion certificate. Without such knowledge, all parties may encounter some road-bumps as the project ends. Therefore, you should ensure that you understand all contract terms before signing and insist upon any clarification if you come across any unclear language
To learn more about a certificate of substantial completion, you can post your job on UpCounsel’s website. UpCounsel’s attorneys have graduated from some of the top law schools in the nation and will answer any questions about contract disputes or a certificate of substantial completion. In addition, they will be at your side if you come across any disputes involving completion certificates and will read over any official agreements before you sign them.